Jobless claims increased by 17,000 last week to a seasonally adjusted 361,000. The pop isn't surprising, nor is it particularly worrisome at this point. As I noted earlier today, before the report's release, my average econometric forecast called for a gain to 361,000. That's exactly what we got—a freak incident of specificity, no doubt. In any case, the higher level of claims looks like noise within the range that's prevailed for much of this year. As a result, today's number, despite what you might hear otherwise, is mostly a yawn.
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New filings for jobless benefits in the neighborhood of 360,000 suggests more of what we've seen in recent months: a labor market that's growing modestly. Last week's four-week average for claims was just under 368,000, or near the lowest levels for this year.
Meanwhile, claims dropped 4.9% last week on an unadjusted basis relative to the year-earlier level. That's a positive sign in that it was a bigger decline than the comparable rate for previous week, although the recent upward bias in this metric looks a bit troubling… if it continues. Before Hurricane Sandy, unadjusted claims were dropping by roughly 10% a year. Post-hurricane data has been falling at a lesser pace. It may simply be blowback from the distorting effects of the storm, in which case we'll see the year-over-year rate move closer to -10% in the weeks ahead. If not, weekly claims may be sending a warning about the labor market for the new year.
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The good news is that last week's annual decline of 4.9% is convincingly lower than the previous week's -1.5% drop. It's worth noting too that a ~5% decline rate at the end of 2011 was typical in the final weeks of last year. That didn't derail the primary trend of modest improvement in the labor market in 2012, although we did have a bumpy ride for a time. History doesn't necessarily repeat, but it may rhyme.
For now, it's premature to say there's a change afoot. Indeed, this is a volatile series and it's always dangerous to assume too much from one or two reports. Nonetheless, the next round of numbers deserve careful scrutiny.